Mercedes recovers from ‘terrible’ start

MERCEDES-BENZ has revealed that “terrible” January sales this year prompted the company to take a “different approach” to its dealer network and launch action against complacency after years of growth in Australia.

The German luxury marque’s paltry 937-unit sales tally in the first month of 2009 was not only 42 per cent down on the previous January’s result, but also put Mercedes-Benz behind arch rival Audi for the first time ever.

And although the company has since retained overall volume leadership (if not luxury segment domination if you discount the Mercedes-Benz commercial vehicle numbers) in the first six months of 2009 with 9398 sales compared to 8021 and 5611 for BMW and Audi respectively, this is still a 6.5 per cent drop against the same time last year, while Audi sales have grown 10 per cent.

There is still plenty of work to be done before Mercedes-Benz feels that it is out of the woods, according to its car group managing director in Australia, Horst von Sanden.

“Every challenge offers an opportunity,” he said.

The six-year veteran of Australia admitted that there have been deep changes to the way that Mercedes-Benz dealers now operated in Australia, following “the wake-up call” in January.



“Our dealer approach has changed,” Mr von Sanden (left) explained to GoAuto Media last week.

“It is now more of a business partnership with the dealers. We both need each other. We believe in a good solid partnership.

“And if somebody cannot get a result then it is unacceptable.” Mercedes-Benz implemented “an extensive and expensive nationwide campaign to improve its dealers,” according to Mr von Sanden.

Among these are better sales techniques, as well as improved service and after-sales training.

However, Mercedes-Benz still has many areas that need to be addressed, including sales volatility in Australia’s largest city.

“Sydney can still be quite unstable,” Mr von Sanden admitted, adding that by contrast, the Melbourne market seemed smoother for the brand.

The controversial Let’s Talk campaign – a direct result of Mercedes-Benz’s massive stock inventory in the wake of the market collapse in the second half of 2008 – is unlikely to ever be repeated.

But Mr von Sanden defends the six-week sale as a necessary tool in extraordinary times, saying he is confident that there will be little damage to the brand or models since the whole industry was undertaking similar discounting measures during the same period.

Mercedes-Benz now has stock shortages in some cases, with the outgoing W211 E-class running out before the new-generation W212 model arrives in dealerships this week. The same is true for the venerable M-class mid-sized SUV.

“The same extra focus (on sales) has been given to models like the M-class – and the result is that we have runout of M-class for now,” Mr von Sanden said.

Last month saw the company’s best ever sales result in Australia, with 1768 units, although Mr von Sanden admits this was driven by the Australian Federal Government’s investment allowance.

Nevertheless, the new E-class sedan and Coupe variants are expected to maintain the momentum for Mercedes-Benz by boasting the same ‘value strategy’ exercised successfully with the W204 C-class in 2007.

This sees lower entry-level prices and more standard features, as well as significant product gains for safety, emissions, economy and performance.

Whether the brand’s improving fortunes over the past few months heralds a gradual luxury market revival in Australia is still too early to tell, the Benz boss believes.

“It is difficult to say if recent success means the market has turned the corner. We need to wait a bit longer (to see). But there are a lot of positive indicators in Australia and globally.”

However, with only ‘green shoots’ of hope emerging from the United States, and Europe still mired in economic recession, Mr von Sanden remains cautious, adding that plenty of hard work is needed before the good times return.

“If you listen to forecasts there are a lot of conflicting predictions,” he warns.

“We will keep monitoring the market and try to keep everything right (by working hard with our dealers).

“Customers initially held back but now they have decided to make purchasing decisions – especially with all the incredible offers out there at the moment.”

Mr von Sanden indicated that a repeat of January was not an option at Mercedes-Benz.

“We had a terrible start in January – and maybe that is what we needed to get a wake-up call and a kick in the butt,” he said.